Relative profitability of improved on - farm water management practices among tenure classes in Milagro County, Ecuador

Water users bear the cost of project construction and maintenance through a system of fixed fees per hectare. The users must also bear the cost of investment in their own on-farm irrigation systems. The object of the study is consideration of the profitability of private investment in on-farm irrigation capital before public funds are committed to project enlargement. The relative profitability of such private investments among tenure classes is also a consideration. A comparison, by tenure class, of returns to area farmers without irrigation vs. those having supplemental water indicates internal rates of returns are associated with the larger size farms. A test of the sensitivity of these results to a range of yields, prices and costs reveals that, for all tenure classes, the internal rate of return remains well above 12% except in the most pessimistic of simulated production conditions.